Campbell reinvents soup, one cup, pouch or K-cup at a time.

NEW YORK | By Atossa Araxia Abrahamian

NEW YORK Oct 30 When Campbell Soup Co
was losing market share to private label brands and smaller
competitors in recent years, it could have used another pop
superstar like Andy Warhol to try to make its brand hip again,
especially with 20-somethings.

Instead, it got a new CEO, Denise Morrison, who spent
hundreds of millions of dollars to reinvent its marketing and
packaging, including to-go soup cups that could be made in a
Keurig coffemaker. She also acquired or developed hundreds of
new products such as puffed Goldfish snacks and
soon-to-be-launched seasoned baby carrots.

Investors have embraced the initiatives, pushing Campbell
stock up more than 30 percent in the last two years.

"The market message has changed toward flavor, how good soup
tastes, how much of a full meal it is," said Jefferies analyst
Thilo Wrede. "I think if she can keep it up, it can make a
difference. The challenge is last year she introduced a lot of
changes."

Under Morrison, Campbell has focused on marketing to
families, teens, and young adults and developing products that
will build loyalty as these consumers age.

These efforts helped boost soup sales by 5 percent last
year, according to Campbell. Soup is expected to make up about a
third of the company's sales in 2014, down from 40 percent in
2012, said Morrison, who was named CEO after working at Campbell
as executive vice president and chief operating officer. The
decline is largely due to the sale of its European soup business
this summer to a private equity firm.

Despite the rise in the share price, it may be too early to
declare Morrison's initiatives a success. The company tried in
the past to lower its sodium, a move most consumers rejected.
This time, it's trying to build the loyalty of the often fickle
younger consumers, who tend to be more price-conscious and less
brand-loyal than older cohorts.

Morningstar analyst Erin Lash, who rates the company's
shares as slightly undervalued, said other rivals including
General Mills Inc's Progresso are trying new innovations and
have increased market share of its ready-to-serve soups.

"Competitive pressures remain intense not just for soup, but
for simple meals in general," she said, referring to other food
items such as macaroni and cheese or frozen pizza.

SELLING TO A NEW GENERATION

Attracting millennial consumers - those born between 1982
and 2002 and beginning to flex some of its economic muscle - is
key to fostering brand loyalty in the long run, Morrison said at
a meeting with analysts in June.

Millennials typically value healthfulness, convenience and
portability, and have a more adventurous palate than previous
generations, but they're also more driven by good deals. And
soup is still considered a "conservative" or "old-fashioned"
food, according to the market research firm Euromonitor.

Campbell has tried to overcome some of these perceptions by
offering more exotic flavors, supplementing the classic tomato
and chicken noodle varieties with such flavors as Moroccan
chicken and curry lentil. It is supplementing the company's cans
- made famous by Andy Warhol 1960s art - with portable bowls and
pouches.

Campbell said the percentage of list sales from new products
grew from 8 percent in fiscal 2011 to 9 percent in 2012 and 10
percent in 2013. The company expects this number to jump to 12
percent in fiscal 2014.

One weak spot, said Wrede, is Campbell's V8 products, which
while popular with baby boomers hasn't won over younger
consumers who like fresh squeezed, refrigerated juices.

Morrison's latest initiative was to take soup to the Keurig
coffee machine, which makes cups of hot beverages from small
single-serve containers.

"I am a Keurig user myself and a couple of years ago I was
using my machine and thinking, I wonder if we can do soup in
this," said Morrison, the oldest of four sisters who themselves
have served in executive roles at AT&T Wireless, Frontier
Communications and Expedia Corporate Travel.

Campbell is positioning the K-cup soups, a collaboration
with Green Mountain Coffee Roasters, as convenient
afternoon snacks that provide "a whole different experience of
soup," Morrison told Reuters in an interview, adding that
company studies found more than 80 percent of Keurig users eat
Campbell soup.

"Single-serve really seems to be working, and we think
there's an opportunity to broaden the occasions where soup is
eaten," said Mark Alexander, president of Campbell North
America.

The K-cups announcement came about a year after the launch
of Campbell's Go Soups, sold in microwaveable pouches designed
to be heated and sipped on the go.

"In food in general and our company, packaging is a key
component to how we innovate. It's part of our broader research
and development strategy. Every innovation team has a packaging
engineer on it," Alexander added.

Bill Bishop, a supermarket consultant, said that changing
packaging could give Campbell a leg up over private label
brands, which often deliver similar products at lower prices.

"Private label is less of a threat when there's
innovation... and moving away from cans is good innovation,"
Bishop said.